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Wal-Mart, Target Discourage Redbox Competition

Wal-Mart is boxing out Redbox, imposing strict limits on the number of DVDs any one customer can buy at a time, making it harder for movie-rental kiosks such as Redbox to acquire large numbers of newly released discs. The new rules took effect Feb. 1 and include a five-DVD cap on new releases, mirroring limits placed by Target (TGT) in December. Target's cap remains in effect for one week to several weeks after a movie is released to stores.

Redbox and NCR are among the largest U.S. operators of DVD-rental kiosks, which rent movies for about $1 a day and, according to Adams Media Research, are the fastest-growing distributors of movie rentals. Kiosk rental sales are expected to rise 42% to $1.3 billion this year, Adams says, stepping up competition with Netflix, iTunes and rental stores, such as Blockbuster Entertainment. Before the limits, Redbox got about 40% of its new DVDs from retailers, Adams estimates.

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